ТОП просматриваемых книг сайта:
Encyclopedia of Chart Patterns. Thomas N. Bulkowski
Читать онлайн.Название Encyclopedia of Chart Patterns
Год выпуска 0
isbn 9781119739692
Автор произведения Thomas N. Bulkowski
Жанр Ценные бумаги, инвестиции
Издательство John Wiley & Sons Limited
Throwbacks and pullbacks. Throwbacks and pullbacks occur almost two‐thirds of the time, and it takes stocks less than 2 weeks to return to the breakout price.
I didn't see any significant performance difference for patterns with and without throwbacks or pullbacks. With other chart patterns, if a throwback or pullback occurs, performance suffers (on average).
Price resumes the upward move 71% of the time (which is quite good) and the downtrend 55% of the time (which needs improvement, but it's not bad).
Gaps. Most of the time (for other chart patterns), breakout day gaps help performance but we see that behavior in this pattern only after a downward breakout.
The rumors you've heard are true: Table 10.5 shows size‐related statistics.
Height. Tall patterns perform substantially better than short ones. How do you use this result? Compute the pattern's height from the price of the top trendline to the last touch of the lower trendline (the lowest low in the pattern). Divide the difference by the breakout price. If the result is above the median shown in the table, then you have a tall pattern; below the median means it is a short one. Invest only in tall patterns unless you feel confident of your assessment.
Table 10.5 Size Statistics
| Description | Up Breakout | Down Breakout |
|---|---|---|
| Tall pattern performance | 46% | –18% |
| Short pattern performance | 39% | –13% |
| Median height as a percentage of breakout price | 9.7% | 10.4% |
| Narrow pattern performance | 41% | –15% |
| Wide pattern performance | 45% | –16% |
| Median width | 50 days | 42 days |
| Short and narrow performance | 40% | –13% |
| Short and wide performance | 37% | –10% |
| Tall and wide performance | 48% | –18% |
| Tall and narrow performance | 43% | –18% |
Width. Wide patterns outperform narrow ones but not by an amount worth telling Mom about. I used the median length to separate narrow patterns from wide ones.
Height and width combinations. The worst performance comes from patterns that are both short and wide. You will want to avoid those. The best performance happens for patterns both tall and wide. The performance differences are large enough that you should pay attention to them when contemplating a trade.
Table 10.6 shows volume‐related statistics.
Volume trend. Volume trends upward most often, but the direction is near random.
Rising/Falling volume. Broadening patterns with rising volume trend show better performance after the breakout than when volume recedes (as measured from the start to the end of the pattern).
Breakout volume. Technical analysts seem to place a lot of emphasis on heavy breakout volume, but as the table shows, the results I found are not statistically significant (for heavy or light breakout volume versus performance).
Table 10.7 shows how often price reaches a stop location. I split the pattern in half (I sedated it ahead of time) and checked how often price returned to the various parts on the journey from the breakout to the ultimate high or low.
Table 10.6 Volume Statistics
| Description | Up Breakout | Down Breakout |
|---|---|---|
| Volume trend | 58% up | 53% up |
| Rising volume trend performance | 45% | –16% |
| Falling volume trend performance | 39% | –14% |
| Heavy breakout volume performance | 43% | –15% |
| Light breakout volume performance | 42% | –16% |
Table 10.7 How Often Stops Hit
| Description | Up Breakout | Down Breakout |
|---|---|---|
| Pattern top | 78% | 2% |
| Middle | 26% | 17% |
| Pattern bottom | 5% | 74% |
For example, broadening patterns with upward breakouts saw price return to the top of the pattern 78% of the time. It suggests you don't want to place a stop‐loss order there. If you stick the stop order at the bottom of the pattern, it'll avoid being hit 95% of the time, but the resulting loss may be higher than you can tolerate. So do check both the position of the stop and the size of the loss should the stop trigger. A volatility stop may be just what you're looking for. I've hidden some in the Glossary (see “Volatility stop”).
Table 10.8 shows the performance over three decades.
Performance over time. For upward breakouts, the 2000s posted stellar gains. Downward breakouts suffered during the same time (and that makes intuitive sense).
Failures over time. Failures (failure of price to rise or fall more than 5% after the breakout) after upward breakouts happened most often in the 2010s, and downward breakouts also show a lot of failures in that decade, but the 2000s edged them out. There were two bear markets during the 2000s, but I used a coffee filter to remove them from the statistics.
Table 10.9 shows statistics for busted patterns.
Table 10.8 Performance and Failures Over Time for Bull Markets
| Description | Up Breakout | Down Breakout |
|---|---|---|
| 1990s | 35% |
|